Do's And Don'ts For Making Truly Good Corporate Citizens

Is the era of attaching a cause to all of our purchases really the best way for companies to prove they care about the world? Or would it would be better to go back to a time when companies just created foundations to give their money away?

Not so long ago, companies participated in philanthropy by donating money to their favorite charity or by giving in-kind donations. They gave because it was important to the company, it was important to the company’s CEO (or his wife; or her husband!), or it projected goodwill and bolstered corporate reputations.

Today we have cause marketing, ethical branding, conscious consumerism, and about a dozen other terms to describe how the marketplace is used to generate charitable donations. While good marketing, they are not an efficient means to generate funding for most charities: These initiatives tend to do far more to boost the corporation’s reputation and bottom line than to help the charitable concern. More broadly, as I discuss in my book Compassion Inc.: How Corporate America Blurs the Line Between What We Buy, Who We Are and Those We Help, these marketing campaigns allow corporations to decide the causes that should get the most funding based on their market potential—a skewed method for determining social policy.

Corporations decide the causes that should get the most funding based on their market potential—a skewed method for determining social policy.

This corporate strategy has become so ubiquitous that it has morphed into marketing wallpaper—it’s there, but we just don’t see it.

Before the cause marketing gravy train stops, and I believe it will (Carol Cone, the mother of cause marketing, pronounced it dead more than a year ago), let’s ensure that structures are in place to enable sustained donations for charities and positively integrated philanthropy within corporations that will achieve the same goals.
Let me give you three dos and one don’t.

The fastest way to ensure social justice and sustainability goals are achieved is by requiring that corporate executives get paid to meet specific, quantifiable objectives. As Daniel Lubin and David Esty noted in their Harvard Business Review article "The Sustainability Imperative," Dow writes sustainability objectives into its management goals. In my own research I discovered that White Wave, a division of Dean Foods, does this as well. Additionally, they train everyone in the company to think about how to improve processes as they relate to food security, renewable energy, and sustainable agriculture. It is a form of internal crowdsourcing, enabling the best ideas to come from anywhere in the company. Importantly, it focuses initiatives on a few key areas. Not every company is good at everything, which leads to point No. 2.

Traditionally, corporations went about the business of creating products and services, while putting their philanthropic initiatives in a separate foundation. Famously, Philip Morris and AT&T supported the arts this way. I can already hear people screaming—this isolates philanthropy and makes it inefficient. Not any more. Companies can’t afford to walk away from philanthropic efforts the way they might have in the past; consumers won’t let them. As for efficiency, too many companies are kidding themselves about the efficacy of cause marketing. It doesn’t accomplish as much as they think, and that dark secret is starting to leak out.

A great example of a new foundation is WeGiveBooks, an initiative of Penguin Books and Pearson Publishing. Young readers or their caregivers read digital books online, and for each book read, a book is donated to a literacy organization. What is so brilliant about this initiative is that it is built around the corporations’ core competencies, it is true to a social justice mission, and it embeds values into the brand—all without asking the consumer to spend a dime.

True innovators do their job and get caught doing something good. The way you "get caught" is by being open about the work that you do.

Being open about your business—as opposed to promoting how good your business is—is the difference between old corporate social responsibility and social innovation. CSR remains primarily the domain of public relations. True innovators do their job and get caught doing something good. The way you "get caught" is by being open about the work that you do.

Editor’s Note

One of our most commented on and controversial articles made this same point specifically about Toms Shoes—that its philanthropy-based business was actually damaging the cause it was trying to fix. Read it here.

I’m not being Milton Friedmanesque here. Companies can and should be philanthropic. However, a product purchase should not be the means to trigger a donation. Here’s why: Society’s most important problems—joblessness, the ever-worsening environment, a crumbling educational system, inadequate health care—are big issues that require big solutions. Cause marketing is "symptom relief." It can alleviate hunger for a while, for example, but it does not solve the underlying problem of chronic unemployment or homelessness.

My fear is that, if we continue to promote these campaigns, we will forever manage symptoms while never addressing root causes. That is the legacy of cause marketing, and one I hope will disappear.

It makes far more sense to run a business that creates a needed product produced sustainably by people earning a good salary who are respected for their work, and give back to your community either through funding, volunteerism, in-kind donations, or all three. That is being a good corporate citizen.

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4Comments

Although Ms. Einstein makes some very valid points, I could not disagree more with the central tenet of the article - that corporations should segregate their corporate giving from their businesses. The conventional corporate giving model that amounts to "handing out fish" cannot possibly accomplish the social imperatives that require attention (and that have been relatively poorly served by the conventional corporate handout models) nor compete with the potential impact of a strategy that instead creates throngs of passionate fishermen. If that happens under a company's brand and improves their business, as well as social outcomes, isn't that a truly sustainable business model?

I believe that the concept of "Doing Well By Doing Good" is not just a tagline. And part of that is the manner of deploying philanthropic and CSR spend. Whether cause marketing programs, dollars for doers grants, broad corporate matching programs, microdonation and crowdfunding models or whatever, a corporate Goodness strategy that seeks to engage customers and employees in voluntary acts of what Carol Cone terms "citizen philanthropy" in more than a lip service way has vastly more potential for changing the philanthropic landscape and increasing the social returns on these investments than will any grants that the vast majority of corporate foundations can execute upon.

Cause marketing should be a part of every good corporate philanthropy program. Sure, we need to address root causes, but we also need campaigns that manage symptoms. You wouldn't take flu medication off the shelf just because the flu shot is available. A comprehensive program should have funding, volunteerism, in-kind donations, AND cause marketing. Leveraging all of a companies assets for the greater good is the best way to be a good corporate citizen.